The point of the APR is that is reflects the true rate of interest you are paying on a loan.
The flat rate lets you work out how much interest in total you will pay, but the flat rate asumes that all of the loan is outstanding until the last day of the period.
In reality, your monthly payments will be a mixture of capital and interest, so the amount outstanding on the loan is going down from the first payment. The APR calculation reflects this.
Although not perfect, you need to be aware of this rate to make better informed choices.In the example in this thread, If I had £20,000 in the bank and could
invest at 6.1% tax free or
borrow at an APR of 4.1% I would borrow.
Being an accountant and generally bright chappie this is all crystal clear to me.
I therefore recommend that either
a you all become acountants or
b you pay me shed loads of money to advise you.
